DISTRIBUTORS INDIA LOGISTICS LKO. THRU. ITS PARTNER (IN WTAX 45 OF 2022) V. UNION OF INDIA THRU. ITS SECY. FINANCE MINISTRY OF FINANCE DEPTT. OF REVENUE, NEW DELHI AND OTHERS

/119/2022

AI Insights

The case involves Distributors India Logistics Lko., which sought a review of a previous judgment dismissing their writ petition against a notice issued under Section 148 of the Income Tax Act, 1961. The original writ petition challenged the validity of the reassessment proceedings initiated by the Income Tax Department, alleging discrepancies in the income reported and the income assessed. The review application argued that the reassessment was based on incorrect assumptions and that the petitioner had disclosed all necessary information. However, the court found that the reassessment was justified based on the undisclosed receipts and lack of adequate explanations provided by the petitioner during the assessment proceedings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 743279 (HC-LUCKNOW)
• Appeal Type: Others
• Pronouncement Date: 24-05-2022
• Assessment Year: misc
• Other Referred Cases: Raymond Woolen Mills Ltd. Versus I.T.O., Phool Chand Bajrang Lal v. I.T.O., Srikrishna (P) Ltd. v. I.T.O., Meera Bhanja v. Nirmala Kumari Choudhury, Perry Kansagra v. Smriti Madan Kansagra, Ajit Kumar Rath, Parision Devi, BCCI v. Netaji Cricket Club
• Laws Referred To: Income Tax Act, 1961, Section 148, Section 147, Section 194 A, Section 194 C, Section 194 H, Section 194 I, Section 194 J
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: MANISH MISRA
• Assessee Lawyers: SHAILESH VERMA
• Keywords: Error apparent on the face of the record; Income Tax; Judicial review; Material facts; Non-disclosure; Reassessment
• Section: 147; 148; 194A; 194C; 194J; 194H; 194I

Judgement Text

"1 Court No. - 2 Case :- CIVIL MISC REVIEW APPLICATION No. - 119 of 2022 Applicant :- Distributors India Logistics Lko. Thru. its Partner (In Wtax 45 Of 2022) Opposite Party :- Union Of India Thru. Its Secy. Finance Ministry Of Finance Deptt. Of Revenue, New Delhi And Others Counsel for Applicant :- Shailesh Verma Counsel for Opposite Party :- A.S.G.I.,Manish Misra Hon'ble Devendra Kumar Upadhyaya,J. Hon'ble Subhash Vidyarthi,J. 1. Heard Sri Desh Deepak Chopra, learned Senior Advocate assisted by Sri Shailesh Verma, Advocate, the learned counsel for the review- applicant and Sri Manish Misra, Advocate, the learned counsel for the respondents. 2. The instant application has been filed for review of the judgment and order dated 20.04.2022 passed in Writ Tax No. 45 of 2022 whereby the writ petition was dismissed. 3. The aforesaid writ petition had been filed by the petitioner challenging the validity of a notice dated 26.03.2021 issued under Section 148 of the Income Tax Act, 1961 as also the reassessment proceedings initiated in furtherance of the aforesaid notice. 4. Upon our direction, the learned counsel for the Income Tax Department has produced the original record of the department, which contained the reasons recorded for initiation of the re-assessment proceedings and it was mentioned therein that the assessee had filed its return of income at Rs.9,62,130/- in its Profit and Loss account, the petitioner had disclosed commission income of Rs.2,50,58,983/- and interest income of Rs. 10,69,452/-; thus, the total receipts of the petitioner, as per the Profit and Loss account were Rs.2,61,28,435/-. However, the petitioner’s total receipts under Sections 194 A, 194 C, 194 H, 194 I and 194 J, as per statement under Section 26AS are Rs.5,23,84,738/- and, 2 therefore, there is a difference of Rs. 2,62,56,303/- in the receipt shown by the petitioner. The reasons recorded further state that during the assessment proceedings the assessee was asked to explain the discrepancies but it gave no explanation for the payments received under Section 194 I and 194 J and it did not disclose the amount claimed towards reimbursement of expenses and amount received by it towards reimbursement. The reasons further state that the petitioner did not submit the details of expenses incurred by it on behalf of the principle and it did not produced any ledger, bills and vouchers of expenses incurred by it on behalf of the principal company and for the aforesaid reasons, the assessing authority came to a conclusion that the petitioner had not truly and fully disclosed all material facts necessary for the assessment, thereby necessitated reassessment under Section 147 of the Act. 5. Keeping in view the scope of judicial review while scrutinizing a notice issued under Section 148 of the Income Tax Act as explained in Raymond woolen Mills Ltd. Versus I.T.O., (1999) 236 ITR 36 (SC), Raymond Woollen Mills Ltd. v. ITO, (2008) 14 SCC 218, Phool Chand Bajrang Lal v. ITO,(1993) 4 SCC 77 and Srikrishna (P) Ltd. v. ITO, (1996) 9 SCC 534, this Court had held that the notice under Section 148 of the Act has been issued after conducting an investigation, going through the relevant documents of the petitioner and after recording a reason to believe that the petitioner had not truly and fully disclosed all the material facts, because of which income amounting to Rs. 2,62,56,303/- has escaped assessment. Therefore, there was prima facie material available before the assessing officer for issuing the notice under Section 148 of the Act and this Court cannot go into the sufficiency or correctness of the material while exercising its jurisdiction under Article 226 of the Constitution of India. For the aforesaid reasons, the writ petition filed for quashing of the notice issued under Section 148 of the Act as well as consequential proceedings was dismissed. 6. The petitioner had filed an application for review of the order mainly on the grounds that it has not received any payment from its 3 principle on which tax has been deducted at source under Section 194 I and 194 J; the reasons recorded by the Assessing Officer contains no mention of the disclosure of the amount of reimbursement of expenses claimed by the petitioner, and therefore, the question of reimbursement of expenses and its non disclosure does not arise; the figure of Rs. 5,40,88,356/- alleged to have been received through commission and Rs. 24,64,404/- alleged to be TDS do not appear in 26AS and the same are imaginary figure. 7. It has also been contended that the judgment in the case of Raymond Woolen Mills Ltd. (supra) is case specific and it cannot be applied to the case of the petitioner and the judgment in Phool Chand Bajrang Lal (supra) supports the petitioner's contention that to initiate reassessment proceedings, the Assessing Officer must have some tangible material before him before proceeding to initiate the reimbursement under Section 147 of the Act. 8. The judgment passed by this Court has also been sought to be reviewed on the ground that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. 9. Before proceeding to examine the submissions of the learned Counsel for the review-petitioner, it would be appropriate to have a look at the scope of review. It is settled law that review cannot be treated as an appeal and a re-hearing of the matter is not allowed in the name of a review of the judgment. Review of a judgment can be sought only the ground that it suffers from an “error apparent on the face of the record”. The meaning of the expression “error apparent on the face of the record” has been explained by the Hon’ble Supreme Court in various decisions, some of are being referred hereinbelow. 10. In Meera Bhanja v. Nirmala Kumari Choudhury, (1995) 1 SCC 170, the Hon’ble Supreme Court explained the term “error apparent on the face of the record” in the following words: - 4 “an error apparent on the face of record must be such an error which must strike one on mere looking at the record and would not require any long-drawn process of reasoning on points where there may conceivably be two opinions. We may usefully refer to the observations of this Court in the case of Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 137, wherein, K.C. Das Gupta, J., speaking for the Court has made the following observations in connection with an error apparent on the face of the record: An error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. Where an alleged error is far from self-evident and if it can be established, it has to be established, by lengthy and complicated arguments, such an error cannot be cured by a writ of certiorari according to the rule governing the powers of the superior court to issue such a writ.” (Emphasis Supplied) 11. In Perry Kansagra v. Smriti Madan Kansagra, (2019) 20 SCC 753, the Hon’ble Supreme Court referred to the earlier decisions on the point and summarized the law on the subject in the following manner: - “15.1.In Inderchand Jain (2009) 14 SCC 663 it was observed in paras 10, 11 and 33 as under: (SCC pp. 669 & 675) “10. It is beyond any doubt or dispute that the review court does not sit in appeal over its own order. A rehearing of the matter is impermissible in law. It constitutes an exception to the general rule that once a judgment is signed or pronounced, it should not be altered. It is also trite that exercise of inherent jurisdiction is not invoked for reviewing any order. 11. Review is not appeal in disguise. In Lily Thomas v. Union of India (2000) 6 SCC 224 this Court held: (SCC p. 251, para 56) ‘56. It follows, therefore, that the power of review can be exercised for correction of a mistake but not to substitute a view. Such powers can be exercised within the limits of the statute dealing with the exercise of power. The review cannot be treated like an appeal in disguise.’ *** 33. The High Court had rightly noticed the review jurisdiction of the court, which is as under: ‘The law on the subject—exercise of power of review, as propounded by the Apex Court and various other High Courts may be summarised as hereunder: 5 i. Review proceedings are not by way of appeal and have to be strictly confined to the scope and ambit of Order 47 Rule 1 CPC. ii.Power of review may be exercised when some mistake or error apparent on the fact of record is found. But error on the face of record must be such an error which must strike one on mere looking at the record and would not require any long-drawn process of reasoning on the points where there may conceivably be two opinions. iii. Power of review may not be exercised on the ground that the decision was erroneous on merits. iv. Power of review can also be exercised for any sufficient reason which is wide enough to include a misconception of fact or law by a court or even an advocate. v. An application for review may be necessitated by way of invoking the doctrine actus curiae neminem gravabit.’ In our opinion, the principles of law enumerated by it, in the facts of this case, have wrongly been applied.” 15.2.In Ajit Kumar Rath(1999) 9 SCC 596, it was observed: (SCC p. 608, para 29) “29. In review proceedings, the Tribunal deviated from the principles laid down above which, we must say, is wholly unjustified and exhibits a tendency to rewrite a judgment by which the controversy had been finally decided. This, we are constrained to say, is not the scope of review under Section 22(3)(f) of the Administrative Tribunals Act, 1985.…” 15.3.Similarly, in Parsion Devi (1997) 8 SCC 715 the principles were summarised as under: (SCC p. 719, para 9) “9. Under Order 47 Rule 1 CPC a judgment may be open to review inter alia if there is a mistake or an error apparent on the face of the record. An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of the record justifying the court to exercise its power of review under Order 47 Rule 1 CPC. In exercise of the jurisdiction under Order 47 Rule 1 CPC it is not permissible for an erroneous decision to be “reheard and corrected”. A review petition, it must be remembered has a limited purpose and cannot be allowed to be “an appeal in disguise”.” 16.On the other hand, reliance was placed by the respondent on the decision in BCCI v. Netaji Cricket Club(2005) 4 SCC 741 to submit that exercise in review would be justified if there be misconception of fact or law. Para 90 of the said decision was to the following effect: (SCC p. 765) 6 “90. Thus, a mistake on the part of the court which would include a mistake in the nature of the undertaking may also call for a review of the order. An application for review would also be maintainable if there exists sufficient reason therefor. What would constitute sufficient reason would depend on the facts and circumstances of the case. The words “sufficient reason” in Order 47 Rule 1 of the Code are wide enough to include a misconception of fact or law by a court or even an advocate. An application for review may be necessitated by way of invoking the doctrine actus curiae neminem gravabit.” 17.We have gone through both the judgments of the High Court in the instant case and considered rival submissions on the point. It is well settled that an error which is required to be detected by a process of reasoning can hardly be said to be an error apparent on the face of the record. To justify exercise of review jurisdiction, the error must be self- evident. Tested on this parameter, the exercise of jurisdiction in the present case was not correct. The exercise undertaken in the present case, in our considered view, was as if the High Court was sitting in appeal over the earlier decision dated 17-2-2017. Even assuming that there was no correct appreciation of facts and law in the earlier judgment, the parties could be left to challenge the decision in an appeal. But the review was not a proper remedy at all. In our view, the High Court erred in entertaining the review petition and setting aside the earlier view dated 17-2-2017.” (Emphasis Supplied) 12. Thus the scope of review is well settled through various pronouncements of the Hon'ble Supreme Court that an application for review does not lie for rehearing of the matter, review can only be sought on the ground of an error which is “apparent on the face of record” and for an error to be “apparent on the face of record” it should not require any long drawn process of reason and there cannot conceivably two views about it. 13. Now we proceed to examine the grounds taken by the petitioner for seeking a review of the judgment passed by this Court so as to ascertain whether this judgment sought to be reviewed suffers from any such error as strikes on mere looking at the record and as would not require any long-drawn process of reasoning for being established and regarding which there may not be conceivably be two opinions. 7 14. In the judgment and order dated 20.04.2022 sought to be reviewed, all the submissions made by the learned counsel for the petitioner have been considered and dealt with including the submissions explaining the discrepancy in 26AS and profit and loss account of the petitioner. We had gone through the entire original record of the department and had found that the Assessing Officer has recorded his reason to believe that the petitioner had not shown certain receipts in profit and loss account and had not given any explanations for the same. It had not disclosed the amount of reimbursement of expenses claimed by it and actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred and it had not produced any ledger, bills and vouchers of expenses during the assessment proceedings. Thus, the petitioner did not make true and full disclosure of all material fact which relied for some income having escaped assessment. This finding is recorded after a thorough scrutiny of the record and after considering the rival submissions made on behalf of the respective parties; does not appear to suffer from any error apparent on the face of the record. The petitioner's contention that it has not received any payment of which tax has been deducted at source under Section 194 I and 194 J is a question of fact which cannot be gone into by this Court either in writ proceedings or in review and this question of fact can only be decided by the Assessing Officer and the petitioner will have full opportunity to raise these factual contentions before the Assessing Authority. Therefore, it is not a case where a miscarriage of justice may occasion to the petitioner by dismissal of the Writ Petition filed against the reassessment proceedings initiated by the Assessing Officer on the basis of reasons recorded indicating that he has reason to believe that certain income of the petitioner has escaped assessment. 15. The next contention of the petitioner that even for the reasons recorded by the Assessing Officer there is no mention of non disclosure of amount of reimbursement of expenses and in absence of any such allegation, the question of reimbursement of expenses and question of non 8 disclosure of the reimbursement of expenses does not arise, also cannot be raised in review proceedings. After going through the original record, we have recorded a categorical finding that the Assessing Officer has recorded his reason to believe that the petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement; that it had not submitted the details of expenses incurred by it for verification during the assessment proceedings and that it had not produced any ledger, bills and vouchers of expenses incurred on behalf of principal company and this finding does not appear to be suffering from any such error, as may be “apparent on the face of the record”. 16. The ratio of the judgments passed by the Hon'ble Supreme Court in the cases of Raymond Woolen Mills Ltd. (1) and (2) (supra), is that at the stage of issuing a notice for reassessment, the court has only to see whether there is prima facie some material on the basis of which, the department could re-open the case; the sufficiency or correctness of the material is not a thing to be considered at this stage, and this ratio does not appear to be based on any peculiar facts so as to be not applicable to the present case and the learned counsel for the petitioner could not point out as to how the aforesaid ratio is based on any peculiar facts and it would not apply to the present case. Therefore, we are unable to accept the submission of the learned Counsel for the petitioner that the judgment in the case of Raymond Woolen Mills Ltd. (supra) is case specific and it cannot be applied to the case of the petitioner. 17. The next submission of learned counsel for the petitioner is that the judgment in Phool Chand Bajrang Lal (supra) supports the view of the petitioner that to initiate reassessment proceedings, the Assessing Officer must have some tangible material before him before initiating reassessment proceedings under Section 147 of the Act which is not there in the present case. 9 18. The learned Counsel for the petitioner has also contended that the order passed by the Hon’ble Supreme Court in Srikrishna (Pvt.) Ltd. versus I.T.O., (1996) 9 SCC 534 relied upon by this Court required that the assessee is under obligation to disclose the material facts and such disclosure should be full and true and the petitioner has made true and full disclosure of all material facts. 19. We are unable to accept this submission because in Phool Chand Bajrang Lal (supra), the Hon'ble Supreme Court had held that the reassessment proceedings may be started either because of some fresh fact come into light which were not previously disclosed or some information with regard to the fact previously disclosed comes into light which intends to expose untruthfulness of those facts. In the present case, the reassessment has been ordered upon discovery of apprehended untruthfulness of facts previously disclosed, and therefore, the judgment in Phool Chand Bajrang Lal (supra) does not support the petitioner and as per the law laid down in Srikrishna (Supra), the reassessment proceedings have rightly been initiated. As already been held by this Court the finding of the Assessing Officer that the petitioner had not made full and true disclosure of all the material facts which relied in an income of Rs. 2,62,56,303/- having escaped assessment is based on reasons which need no interference by this Court in exercise of its jurisdiction under Article 226 of the Constitution of India and we do not find any error apparent on the face of record in the aforesaid finding. 20. The judgment passed by this Court has also been sought to be reviewed on the ground that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. In the judgment sought to be reviewed, the judgments of Aventis Pharma Ltd. versus ACIT, (2010) 323 ITR 570 (Bom), Arun Gupta versus Union of India, (2015) 371 ITR 394 (All) and United Electrical Co. Ltd. versus Commissioner of Income Tax, (2002) 258 I.T.R. 317, cited by the learned counsel for the petitioner have been referred to and dealt with. This Court is not obliged to refer to each and every judgment 10 forming part of a compilation of judgments submitted after conclusion of oral submissions, which judgments were not placed before the Court during oral submissions. Moreover, while deciding the writ petition, we have referred to and relied upon the relevant case laws and it is not been submitted by the petitioner that in the judgment sought to be reviewed, the law applicable to the facts of the case has not been taken into consideration. Therefore, this submission also stands rejected. 21. For the reasons stated above, the instant application for review of the judgment and order dated 20.04.2022 lacks merit and is, accordingly dismissed. 22. However, there will be no order as to costs. Order Date :- 24.5.2022 Jaswant Digitally signed by JASWANT KUMAR Date: 2022.05.27 19:07:31 IST Reason: Location: High Court of Judicature at Allahabad, Lucknow Bench "